Here’s the Latest: Patent Reform

Over the last decade, there has been a dramatic increase in the abusive actions of patent assertion entities (PAEs). These entities, also known as patent trolls, have gone after a wide swath of US industries, by threatening legal action in an attempt to leverage quick settlements. Patent troll litigation cost the U.S. economy $29 billion in 2011. In 2013, patent trolls filed up to 67% of all patent lawsuits, up from 28% in 2009.

Importance to Magazine Media:

Magazine media companies have faced, and continue to face, harassment from patent trolls. Patent trolls -entities that buy patents for a technology or product they didn’t actually create- are able to benefit financially by claiming infringement, demanding licensing fees and then pursuing legal action in order to force an out of court settlement. Companies that are targeted by patent trolls in this manner and choose not to settle are rarely able to recoup their litigation expenses after facing years of discovery and litigation.

An example of this is a PAE that first commenced legal action in 2011 claiming a patent it owned covered online menu planners and recipe search tools. The company, DietGoal, LLC., filed a suit against about 75 defendant food manufacturers, retailers and media companies including several MPA member companies. DietGoal was able to obtain a number of settlements at an average of $200,000 per targeted website. Several larger companies fought the claims in court, and after four years of litigation the Court of Appeals for the Federal Circuit Court ruled in their favor, finding the patent to be invalid because it claimed ownership of the idea of meeting a person’s nutritional goals through meal planning. Since this case was filed, federal legislation discouraging multi-defendant patent infringement lawsuits against unrelated defendants has been enacted. While the legislation has alleviated this particular abuse, patent trolls continue to plague industry with frivolous lawsuits and bogus infringement claims. Reform continues to be needed.

The issue of patent trolls in the United States has become increasingly problematic -particularly in the technology space where new ideas and developments are occurring at a rapid pace and patents may be less tangible. As magazine media companies develop new ways to connect and enhance their reader’s brand experience through digital and mobile platforms, it is imperative that legislative action be taken to curtail these abusive practices that are stifling innovation and exploiting the U.S. patent system.

State of Play:

In the 114th Congress, Judiciary Committees in both the House and Senate have introduced similar legislative efforts aiming to curb patent troll abuses by making significant changes in patent infringement litigation procedures. While several obstacles –related mainly to disputes over the process for challenging the validity of patent claims- have delayed early movement in both chambers, stakeholders remain optimistic that Congress will pass legislation for the President to sign into law..

In 2014, the Supreme Court issued a series of rulings aimed at reducing patent troll activity by making it easier for a defendant to recover legal costs in frivolous law suits and making it easier to challenge the validity of a vague patent. Additionally, the Federal Trade Commission (FTC) completed enforcement action against one of the most egregious patent troll offenders. The settlement prohibits the law firm from making deceptive representations in patent infringement demand letters and carries a $16,000 penalty per violation.